The World Trade Organization (WTO) sentenced The US announced on Tuesday (15.09.2020) that US tariffs on Chinese goods violate international rules. This is a major blow to US President Donald Trump's trade war with Beijing, which has seen Washington impose tariffs on more than $550.000 billion worth of Chinese exports.
At Tuesday’s session, a panel of three trade experts declared that Washington violated international rules when it imposed tariffs on Chinese goods in 2018. While the ruling reinforces Beijing’s claims that Trump’s trade war circumvented WTO rules, the US can veto the decision by filing an appeal within the next 60 days. That’s because the Trump administration has already paralyzed the WTO’s appellate body, a tactic that has rendered the world’s top trade arbiter ineffective.
The dispute centers on the Trump administration's use of a 1970s U.S. trade law all with unilaterally launching its trade conflict against China in 2018.
China claimed the tariffs violated the WTO's most-favored-nation treatment provision because the measures did not provide the same tariff treatment that the U.S. grants to imports from all other members of the trade organization. China also claimed the tariffs violated a key dispute settlement rule that requires countries to first seek recourse to the WTO's dispute settlement body before imposing retaliatory tariffs against another country.
The U.S. tariffs against China were authorized under Section 301 of the Trade Act of 1974, which gives the president the power to impose tariffs and other import restrictions whenever a foreign country engages in unfair trade practices that affect U.S. commerce. The Trump administration has said the U.S. tariffs were necessary to address China’s widespread intellectual property rights violations and forced technology transfer policies.
Although the use of Section 301 is unprecedented, the provision was disabled in the 1990s after the US agreed to first follow the WTO dispute settlement process before triggering any retaliatory trade measures under Section 301.
Source: Bloomberg
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